Employer of Record in The Philippines

Businesses can only operate smoothly in The Philippines if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The Philippines below, to avoid any compliance issues.

Employment Contract Requirements

When hiring In the Philippines, there is no legal obligation to establish a written employment contract. Employment contracts typically contain:

• Start date (and duration for temporary contracts)
• Description of the role, position, duties, and responsibilities
• Advance notice requirements for terminating employment
• Company code of conduct and complaint procedures

Onboarding Process

We can help you get a new employee started in The Philippines quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

In the Philippines, employers must adhere to the Labor Code, which establishes standard working hours and overtime regulations to ensure compliance and promote employee satisfaction. The standard workday is eight hours, excluding a mandatory 60-minute meal break, typically resulting in a 48-hour workweek over six days. Any work beyond the standard eight-hour day is considered overtime and must be compensated accordingly.

Overtime compensation is mandated at an additional 25% of the employee's regular hourly wage for work performed beyond eight hours on regular working days. For overtime work on rest days, special non-working days, or regular holidays, the overtime pay rate increases to an additional 30% of the regular hourly wage. Certain employees, such as managerial staff, are exempt from these overtime provisions. Non-compliance with these regulations can lead to legal penalties and damage to the company's reputation.

As of January 2025, the minimum wage in the Philippines varies by region and industry, with the National Capital Region (NCR) setting a daily rate of ₱645 for non-agricultural workers.

Employers must be aware of how these rates apply to different categories of workers, including full-time and part-time employees, interns, trainees, and expatriates. Factors such as industry-specific variations, economic conditions, and government policies significantly influence minimum wage determinations. Regular reviews by the Regional Tripartite Wages and Productivity Boards ensure that wage policies remain responsive to the evolving economic landscape. Staying informed about these regulations is crucial for employers to maintain compliance and ensure fair compensation for their workforce.

Understanding payroll and employment tax obligations in the Philippines is crucial for businesses to ensure compliance with local regulations and foster positive employee relations. Key taxes include income tax withholding, Social Security System (SSS) contributions, PhilHealth contributions, and Pag-IBIG contributions, each with specific calculation methods, rates, and deadlines. Employers must register with relevant government agencies, remit contributions on time, and adhere to legal requirements to avoid penalties and maintain employee trust. Utilizing payroll management software can help employers efficiently manage payroll processes, consolidate data, and remain compliant with the Philippines' payroll tax regulations.

In the Philippines, work permits and visas are essential for employers looking to hire foreign nationals. The process typically starts with obtaining an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE), which confirms that no qualified Filipino is available for the role. Once the AEP is secured, employers can proceed with work visa applications such as the 9(g) Pre-Arranged Employment Visa, which allows foreign nationals to work for a specific employer, or the 47(a)(2) Special Non-Immigrant Visa for employees of regional headquarters or multinational firms. Short-term assignments are covered by the Special Work Permit (SWP), while the Provisional Work Permit (PWP) allows employees to begin work while awaiting their 9(g) visa approval.

Employers must follow a structured application process, including labor market tests, document submissions, and fee payments, while ensuring compliance with local labor regulations. Understanding the various permit and visa types and planning for processing times and renewals is crucial to successfully employing international talent in the Philippines.

In the Philippines, leave policies are designed to ensure employee well-being while maintaining compliance with labor laws. The primary annual leave entitlement is the Service Incentive Leave (SIL), which provides five days of paid leave per year for employees who have completed at least one year of service. This leave can be used for vacation or sick purposes. Additionally, the country mandates various other leave benefits, including 105 days of paid maternity leave (with an extra 15 days for solo parents), 7 days of paid paternity leave, and special leave for women undergoing gynecological surgery.

Employers in the Philippines must also adhere to public holiday regulations, as employees are entitled to 18 national holidays per year. While sick leave is not specifically mandated, many employers offer additional benefits beyond the required SIL. Companies are encouraged to establish clear leave policies, ensuring compliance with regulations and supporting employee welfare. By maintaining transparent and flexible leave policies, businesses can enhance employee satisfaction and productivity while meeting legal obligations.

Employers in the Philippines are required to provide essential benefits such as contributions to the Social Security System, PhilHealth, Pag-IBIG Fund, 13th-month pay, service incentive leave, and maternity and paternity leaves. To attract and retain top talent, many employers also offer supplemental benefits like private health insurance, group life insurance, additional paid time off, performance bonuses, flexible work arrangements, and wellness programs. Understanding and effectively implementing these benefits is crucial for compliance and for fostering a motivated and satisfied workforce.

In the Philippines, employment termination must adhere to strict legal guidelines to ensure fairness and compliance with labor laws. Employers may terminate employees based on just causes, such as serious misconduct or fraud, or authorized causes, including redundancy or business closure. Just cause terminations require due process, including notice and a hearing, while authorized cause terminations necessitate a 30-day notice to both the employee and the Department of Labor and Employment (DOLE).

Severance pay is mandated for employees terminated due to authorized causes, with compensation varying based on the reason for termination. Redundancy entitles employees to one month's pay per year of service, while retrenchment or business closure results in a lower payout. Employees dismissed for just causes are generally not entitled to severance pay. Employers must also provide final wages, unused leave payouts, and official termination documentation. Ensuring compliance with these regulations helps employers avoid legal disputes and safeguards employee rights.